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It’s been a long time since I got this granular with distribution issues (see Task Interleaving in the DC – Reality of Myth?), but some recent discussions with a couple of companies and some smart distribution experts got me on the track of a basic but very important distribution question: when does it make sense to use “waves” to process order batches and release picks to the floor, and when not?

To get everyone on the same page, a “wave” is basically an automated grouping of orders by some criteria that is released to the floor for processing as a set. Grouping attributes might be a set of carriers, a group of stores in retail, high priority orders, orders requiring a specific type of value-added services, or even a specific customer or three if they order in large enough quantities. In general, a wave should consist of something like 45 minutes to 2 hours worth of work.

Let’s dismiss for a second distribution models like flow through or cross dock where waving just doesn’t apply. What’s the alternative to wave processing? Some form of straight order release, where orders flow right to a work queue, with high priority orders and/or those deemed important by a supervisor (e.g., the truck is here!) bubbled to the top. And are their maybe some alternatives in between?

At a high level, wave processing does allow creating of a manageable block of work, can allow the picks to be sequenced in logical groups that meet any number of operational and shipping requirements, and (depending on the scope of the supporting WMS technology) enable order batches to be released that balance work across areas.

In these recent conversations, however, I’ve heard some shippers wonder whether some of the expected efficiency of wave processing is lost in terms of labor workforce downtime at the end of waves. It also seems that in today’s increasingly complex DCs and distribution channels, what is often really needed is an intelligent release of different batches to different processing areas, in effect a series of waves that is different than the traditional model.

I asked SCDigest friend Noah Dixon, VP of Product Management for Catalyst, where he thought the use of wave processing made the most sense.

“One thing that is different today than a few years ago is how orders come down to the DC,” Dixon noted. “Before, almost everyone got a batch download of orders in the morning, and that big batch lends itself to wave thinking. Now, while big one time downloads are still frequently found, many more companies get orders in near real-time all day, which changes your operating model.”

Wave processing is the “moment of truth” when the WMS looks for consolidation opportunities to reduce travel time and transportation costs, Dixon added. “In addition, when the work force moves through the facility with the work or where the material handling control systems need it, wave processing is really the only way to go.” However, he added that “most warehouses run better if the work is released when needed rather than in bigger groups. Exceptions will be fewer and less expensive.” He also added that in facilities that are mostly pallet picks for truckload and multi-stop TL shipments, such as food and consumer packaged goods companies, it is generally easier and faster to release orders based upon appointment times rather than waves.

Brian Hudock, a principle at Tompkins Associates, offered some similar thoughts. He’s seen waves used to facilitate a group of workers first completing picks in one area for the wave of orders, then moving to another area for the next wave, etc., in addition to the traditional retail model where a wave is released for a group of store replenishment picks, followed by the next, etc. But he noted with the growing complexity of DCs, the order release process is one where there is still often a lot of customization in WMS implementations to meet the unique needs of each company.

“I’m not sure you could or would want to build those specific rules into a base WMS product,” Hudock added, noting that the end effect may use some wave principles, but does not involve a “master wave” across areas, but rather an interleaved series of smaller ones.

Finally, Jim Barnes of enVista thinks there may be a hybrid model, even in retail. “Too often waves are used trying to optimize picking efficiency, when for highly automated environments we should be trying to optimize equipment utilization,” Barnes told me. For many environments, this would better be done by “waveless” picking that still gains consolidation efficiencies through local area batching, using “dynamic” inventory allocation, so the equipment is never starved for work waiting for the next wave.

By the way, if you are at all interested in Warehouse Management Systems, you can really benefit from our How to Select a WMS 2006 Videocast (where I am joined by Jim Barnes and SCDigest’s Mark Fralick). We have a similar one for Transportation Management Systems as well, both in two weeks, though you can watch on-demand later if you can’t make the original dates.

We’re out of space. I am still pondering. More in a few weeks. We’d love your thoughts.

Where does use of pick waves makes sense and where not? Is this changing based on changing DC and order dynamics? Are there alternatives between a full wave orientation and straight order release to the floor?

If you are considering integrating voice directed solutions into your warehouse or are just interested in learning more about the benefits of voice directed logistics solutions, this document is a must read.

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YOUR FEEDBACK

Feedback is coming in at a rate greater than we can publish it - thanks for your response.

We need to make a correction. Our News and Views piece a few weeks ago on Bookham's profit problem triggered by challenges transitioning manufacturing to China incorrectly stated that a plant in the U.K. was being closed as part of the process, according to a company spokesperson. Our apology for the error.

Also, several readers have suggested we look at options for handling all the feedback (forums, etc.) since we just can't fit it all on these pages. We are pursuring several of those options. Thanks for your suggestions.

This week, we're running feedback from our First Thoughts piece on "Supply Chain Risk in China" , which generated many, many letters. Our feedback of the week on this topic is from Tom Dadmun of Adtran, with some of his usual provocative thoughts. Several wrote noting we should have added another item to our lists of risks, around "peak oil," or rising fuel costs generally; we agree, but believe this impacts all potential Asian countries as sourcing locales. We were focusing more specifically on unique China risks.

The road that looks like it is lined with Gold may not always be the case. Immediate savings that result in profits to the bottom line by outsourcing to China have been hailed as the new "golden goose". "You can not lose!" is the mantra from some folks who have taken a cursory look at the goose and charged a path to the Orient. But as they say… buyer beware. There are numerous paybacks to outsourcing in China but you really need to be armed with the facts and the analysis before you buy that two for one special ticket to China.

For instance, you really need to have a metrics based strategy with a landed cost analysis in order to make a comprehensive decision. Lower costs on a product standard versus product standard are there to be sure, but that is the cursory look. You must do a deep dive and understand the hidden costs. We teamed up with the folks at Georgia Tech to develop a landed cost tool that can separate fact from hype. The journey to bottom line profits is fraught with hidden costs of transportation, travel, miscommunication and service providers that are not agile, non responsive and have quality as a number ten focus. One must choose carefully before signing a contract on the bottom line.

Couple this with the risks of logistics channels such as fuel surcharges on air and water, congestion at the US ports ( which are already under capacity today and are forecasted to get worse ) and the cry for additional customs screening ( that will come with a new fee, rest assured ). The risk of revaluation is also on the horizon with the question of when… not if.

However, there are significant profits for one who does the due diligence analysis, teams up with a tried and true service provider and has a best in class logistics strategy. The increased profits are there, you just have to have a methodical plan of attack to catch the elusive goose!

Tom Dadmun

VP Supply Chain

Adtran

More on China risk :

Good article:

I suggest you investigate a fourth item which many people would place at the number 1 or 2 position:

The concept known as “Peak Oil” predicts dramatic increases in the costs of transportation and disruptions global supply chains.

I teach seminars on best practices in supply chain management and am amazed at the ignorance displayed by “professionals” responsible for shifting production to China and other locations. Many have never heard the term and seem to think that high gasoline prices are temporary distortions caused by forces unknown.

In regards to Peak Oil àChina is very serious about locking in future supplies and their growth in demand is not supported by projected growth in supply. In fact, if supply does peak and begins to decline, then…

Mike Loughrin, Partner

Transformance Advisors Inc.

I have to agree with Dan on this one.

China is a silent communist giant that is sucking up the world's resources.
We have already seen how the oil industry has basically held us captive as a nation. Now, we are becoming captives to the inexpensive products/services of China. If, for any of the reasons Dan outlined in his article, China becomes 'unstable', we may be in for some real economical hardships.

Can US corporations find an "insurance policy" that protects their company & our jobs and still be competive in the market place?

PLM (or SCM), in the sense to short the production to store deliveries… Is true that some retailers are thinking on close production countries, searching for shorten receive time (transport), and adapt the production rate to demand. USA -> Caribbean, LA; Europe: Morocco, but also Turkey, Eastern EU countries.

Carlos Ponce

Business Development Manager

Enabler

The article on the risks of china was pretty insightful, but missed one key aspect. Fuel costs. It won't take much to drive the transportation costs of getting the goods to the US to the point where the total landed cost isn't as attractive. this is especially true for bulky/heavy products.

Greg Gilbert

Director | RFID Solutions

Manhattan Associates, Inc

SUPPLY CHAIN TRIVIA

Q. Despite a huge national customer base and east coast DC network, what is QVC's average UPS zone moves across its shipments?

A.Only 2.4, through use of aggressive line haul transportation moves to local zone areas.